Coming to the right price on your property can be one of the most important aspects of achieving a great price. This works weather your market by a ‘No Price’ (Auction or Tender) or a ‘Price’ campaign.
Whichever way you go when you initially list your home you need to know what it is worth, and it is a legal requirement under the REAA that you are provided with a full written assessment, or Comparative Market Analysis.
There are only four ways that you can price a home, they are:
- Look at recent comparable sales thoroughly compare features and benefits of each property.
- Calculate a ‘replacement value cost’. This is done just like a Registered Valuer would do.
- Compare it against the CV (also known as GV/ Government Valuation).
- Take a wild guess, ‘let the market decide’, ‘let’s see what buyers say think it’s worth’ or lick your finger in the air and pull out a price.
If you are ever offered option 3 or 4 as ways to value your home from a Real Estate Agent, run for the hills. That is a complete cop out.
The only truly effect way to establish price is options 1 and 2, and better yet combine the two of them.
One of the things that we have learnt is that the market is very sensitive to price. I believe it is by as little as $5-10K. It is so easy for buyers to get all the sales stats themselves now, all they have to do is go on QV and pay about $30. If you get the price wrong at the start you lose your impact, which will cost you money.
Before we had Trademe, Realestate.co.nz and the power of internet marketing you used to be able to use the ‘price drop strategy’ (price it high and drop the price every 2 weeks until you hit the sweet spot), but you simply cannot use that anymore. All the action happens in the first 2 weeks on properties now. You need to ensure that your pricing is accurate right from the outset.
You might not think that this important if you are going to Auction, but it is absolutely necessary. In my experience buyers are just concerned that they are going to pay too much, they just need to be made confident of the price in a logical manner. Then their emotions are free to kick in, particularly if it is a competitive situation.
By sitting down with buyers and clearly communicating how we have established the price with them I have made my vendors tens of thousands of dollars, on numerous occasions. You also need to clearly understand where your value should be when setting the reserve, often buyers lie in their pricing feedback when coming through open homes – surprise, surprise!
Always ensure that you correctly establish the price for your home, if you would like some help with your property please call me on 09 481 0648 or email me to discuss further.